Replies to post #80965 on Biotech Values

[jbog]

GILD;


Adam Feuerstein
Gilead Sciences
7/16/2009 4:56 PM EDT



Gilead Sciences and a unit of J&J have signed an agreement to develop and market a new single-pill HIV treatment that combines Gilead's Truvada with J&J's experimental drug TMC278.

The deal gives Gilead a second single-pill HIV drug to market. The first, known as Atripla, combines Truvada with BMY's Sustiva. [This new pill essentially swaps TMC278 for Sustiva. ]

All in, a good deal for Gilead which deepens its already-deep HIV business and should boost profitability.

Position: none
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Adam Feuerstein
More Gilead
7/16/2009 5:10 PM EDT



I failed to mention the aspect of the Gilead deal that will likely charm investors the most: A new single-pill HIV drug should assuage investor worries about a generic hit to Gilead's core HIV business starting in 2017.

A 2017 generic threat is one of the biggest reasons for why Gilead has under-performed other biotech stocks this year. 2017 seems far away to me, but regardless, it's been an overhang.

I'll try to get into more of the details tomorrow, but anyone with access to research can pull up a smart note from Bernstein's Geoff Porges from June 23. The note calls for GILD to do exactly the deal the company pulled off today. It's worth reading.

Position: none